DGAP-News: Hudson Highland Group Reports 2011 First Quarter Financial Results

Hudson Highland Group, Inc.

26.04.2011 22:00
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NEW YORK, 2011-04-26 22:00 CEST (GLOBE NEWSWIRE) —
Hudson Highland Group, Inc. (Nasdaq:HHGP), one of the world–s leading providers
of permanent recruitment, contract professionals and talent management
solutions, today announced financial results for the first quarter ended March
31, 2011.

2011 First Quarter Summary

— Revenue of $218.5 million, an increase of 21.3 percent over the first
quarter of 2010, and approximately flat to the fourth quarter of 2010
— Permanent recruitment continued to deliver the strongest service line
revenue growth, up 31.8 percent from the prior year quarter
— Temporary contracting revenue increased 20.8 percent in the first quarter,
representing the fifth consecutive quarter of accelerating growth over the
prior year period
— Gross margin of $81.2 million, or 37.2 percent of revenue, up 22.2 percent
from the same period last year, and a decrease of 2.1 percent from the
fourth quarter of 2010
— All regions contributed to strong top-line growth, reporting double-digit
revenue and gross margin increases in the first quarter compared with the
prior year period
— EBITDA* of $2.5 million, or 1.2 percent of revenue, improved from an EBITDA
loss of $1.4 million for the first quarter of 2010
— Net loss of $0.0 million, or $0.00 per basic and diluted share, compared
with net loss of $4.2 million, or $0.16 per basic and diluted share, in the
first quarter of 2010

* EBITDA is defined in the segment tables at the end of this release and
includes other non-operating income.

–We are encouraged that the demand for our services continues to grow,– said
Mary Jane Raymond, Hudson Highland Group–s interim chief executive officer and
chief financial officer. –This quarter was Hudson–s fifth consecutive quarter
of increased revenue growth over prior year. Even as some clients continue to
face economic uncertainty, they are increasingly relying on Hudson to select
their strategic hires.–

Regional Results

Regional results for the first quarter in constant currency were:

— Europe gross margin was up 18 percent, led by 21 percent growth in the U.K.
and 16 percent growth in continental Europe, compared with first quarter
2010
— Australia/New Zealand gross margin was up 22 percent compared with the
prior year period, led by 44 percent growth in permanent recruitment
— Asia gross margin was up 9 percent compared with first quarter 2010
— Americas gross margin was up 11 percent compared with the prior year
period, driven by 9 percent growth in temporary contracting and 27 percent
growth in permanent recruitment

Liquidity and Capital Resources

The company ended the first quarter of 2011 with $71.0 million in liquidity,
composed of $28.3 million in cash and $42.7 million in availability under its
credit facilities. The company used $10.3 million in cash flow from operations
during the quarter and increased its outstanding borrowings from $1.3 million
at the end of the fourth quarter to $11.2 million at the end of the first
quarter. Cash usage in the first quarter was driven by revenue more weighted to
the end of the quarter and payment of annual bonuses. Days Sales Outstanding
(DSO) rose to 55 days from 49 at the end of 2010 and 53 a year ago.

Guidance

The company currently expects second quarter 2011 revenue of $230 – $240
million and EBITDA of $5 – $8 million at prevailing exchange rates. This
compares with revenue of $195.0 million and EBITDA of $3.1 million in the
second quarter of 2010.

Additional Information

Additional information about the company–s quarterly results can be found in
the shareholder letter and the quarterly earnings slides in the investor
information section of the company–s Web site at www.hudson.com.

Conference Call/Webcast

Hudson Highland Group will conduct a conference call Wednesday, April 27, 2011
at 10:00 a.m. ET to discuss this announcement. Individuals wishing to listen
can access the Webcast on the investor information section of the company–s Web
site at www.hudson.com.

The archived call will be available on the investor information section of the
company–s Web site at www.hudson.com.

About Hudson Highland Group

Hudson Highland Group, Inc. is a leading provider of permanent recruitment,
contract professionals and talent management services worldwide. From single
placements to total outsourced solutions, Hudson helps clients achieve greater
organizational performance by assessing, recruiting, developing and engaging
the best and brightest people for their businesses. The company employs more
than 2,000 professionals serving clients and candidates in approximately 20
countries. More information is available at www.hudson.com.

Safe Harbor Statement

This press release contains statements that the company believes to be
–forward-looking statements– within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact included in this press release, including statements regarding
the company–s future financial condition, results of operations, business
operations and business prospects, are forward-looking statements. Words such
as –anticipate,– –estimate,– –expect,– –project,– –intend,– –plan,– –predict,–
–believe– and similar words, expressions and variations of these words and
expressions are intended to identify forward-looking statements. All
forward-looking statements are subject to important factors, risks,
uncertainties and assumptions, including industry and economic conditions that
could cause actual results to differ materially from those described in the
forward-looking statements. Such factors, risks, uncertainties and assumptions
include, but are not limited to, global economic fluctuations; risks related to
fluctuations in the company–s operating results from quarter to quarter; the
ability of clients to terminate their relationship with the company at any
time; competition in the company–s markets; risks associated with the company–s
investment strategy; risks related to international operations, including
foreign currency fluctuations; the company–s dependence on key management
personnel; the company–s ability to attract and retain highly skilled
professionals; risks in collecting the company–s accounts receivable; the
company–s history of negative cash flows and operating losses may continue;
restrictions on the company–s operating flexibility due to the terms of its
credit facility; implementation of the company–s cost reduction initiatives
effectively; the company–s heavy reliance on information systems and the impact
of potentially losing or failing to develop technology; risks related to our
dependence on uninterrupted service to clients; the company–s exposure to
employment-related claims from both clients and employers and limits on related
insurance coverage; volatility of the company–s stock price; the impact of
government regulations; and restrictions imposed by blocking arrangements.
Additional information concerning these and other factors is contained in the
company–s filings with the Securities and Exchange Commission. These
forward-looking statements speak only as of the date of this document. The
company assumes no obligation, and expressly disclaims any obligation, to
update any forward-looking statements, whether as a result of new information,
future events or otherwise.

Financial Tables Follow

HUDSON HIGHLAND GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)

Three Months Ended
March 31,
———————
2011 2010
———————

Revenue $ 218,539 $ 180,118
Direct costs 137,341 113,697
———————
Gross margin 81,198 66,421
———————
Operating expenses:
Selling, general and administrative expenses 78,808 68,333
Depreciation and amortization 1,576 2,287
Business reorganization and integration expenses 351 113
———————
Total operating expenses 80,735 70,733
———————
Operating income (loss) 463 (4,312)
Other income (expense):
Interest, net (206) (232)
Other, net 487 658
———————
Income (loss) from continuing operations before provision 744 (3,886)
for income taxes
Provision for income taxes 750 252
———————
Loss from continuing operations (6) (4,138)
Loss from discontinued operations, net of income taxes — (69)
———————
Net loss $ (6) $ (4,207)
=====================
Basic earnings (loss) per share:
Loss from continuing operations $ (0.00) $ (0.16)
Loss from discontinued operations — (0.00)
———————
Net loss $ (0.00) $ (0.16)
=====================

Diluted earnings (loss) per share:
Loss from continuing operations $ (0.00) $ (0.16)
Loss from discontinued operations — (0.00)
———————
Net loss$ (0.00) $ (0.16)
=====================

Weighted average shares outstanding:
Basic 31,325 26,257
Diluted 31,325 26,257

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HUDSON HIGHLAND GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)

March 31, December
2011 31,
2010
———————
ASSETS
Current assets:
Cash and cash equivalents $ 28,311 $ 29,523
Accounts receivable, net 145,505 128,576
Prepaid and other 14,046 13,988
———————
Total current assets 187,862 172,087
Property and equipment, net 16,114 16,593
Other assets 18,422 17,154
———————
Total assets $ 222,398 $ 205,834
=====================

LIABILITIES AND STOCKHOLDERS– EQUITY
Current liabilities:
Accounts payable $ 11,732 $ 14,812
Accrued expenses and other current liabilities 82,434 74,990
Short-term borrowings 11,156 1,339
Accrued business reorganization expenses 2,176 2,619
———————
Total current liabilities 107,498 93,760
Other non-current liabilities 10,491 10,493
Income tax payable, non-current 8,158 8,303
———————
Total liabilities 126,147 112,556
=====================
Stockholders– equity:
Preferred stock, $0.001 par value, 10,000 shares — —
authorized; none issued or outstanding
Common stock, $0.001 par value, 100,000 shares authorized; 33 32
issued 32,838 and 32,181 shares, respectivelyAdditional paid-in capital 467,782 466,582
Accumulated deficit (408,205) (408,199)
Accumulated other comprehensive income?translation 36,947 34,902
adjustments
Treasury stock, 53 and 9 shares, respectively, at cost (306) (39)
———————
Total stockholders– equity 96,251 93,278
———————
Total liabilities and stockholders– equity $ 222,398 $ 205,834
=====================

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HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS – QUARTER TO DATE
(in thousands)
(unaudited)

For The Three Hudson Hudson Hudson Hudson Corporate Total
Months Ended March Europe ANZ Americas Asia
31, 2011
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Revenue, from $ 93,710 $ 70,804 $ 45,812 $ 8,213 $ — $ 218,539
external customers
============================================================
Gross margin, from $ 38,937 $ 24,019 $ 10,356 $ 7,886 $ — $ 81,198
external customers
============================================================
Business $ 351 $ — $ — $ — $ — $ 351
reorganization and
integration
expenses
Non-operating 1,610 1,045 583 91 (3,816) (487)
expense (income),
including
corporate
administration
charges
————————————————————
EBITDA (Loss) (1) $ 2,175 $ 1,041 $ (379) $ 973 $ (1,284) $ 2,526
Depreciation and 1,576
amortization
expenses
Interest expense 206
(income), net
Provision for 750
(benefit from)
income taxesLoss (income) from —
discontinued
operations, net of
taxes
———-
Net income (loss) $ (6)
==========

For The Three Hudson Hudson Hudson Hudson Corporate Total
Months Ended March Europe ANZ Americas Asia
31, 2010
————————————————————
Revenue, from $ 76,654 $ 56,822 $ 39,507 $ 7,135 $ — $ 180,118
external customers
============================================================
Gross margin, from $ 32,530 $ 17,776 $ 9,279 $ 6,836 $ — $ 66,421
external customers
============================================================
Business $ 87 $ (116) $ 142 $ — $ — $ 113
reorganization and
integration
expenses
Non-operating 1,178 582 (509) 188 (2,097) (658)
expense (income),
including
corporate
administration
charges
————————————————————
EBITDA (Loss) (1) $ 436 $ 249 $ (241) $ 597 $ (2,408) $ (1,367)
Depreciation and 2,287
amortization
expenses
Interest expense 232
(income), net
Provision for 252
(benefit from)
income taxes
Loss (income) from 69
discontinued
operations, net of
taxes
———-
Net income (loss) $ (4,207)
==========

For the Three Hudson Hudson Hudson Hudson Corporate Total
Months Ended Europe ANZ Americas Asia
December 31, 2010
————————————————————
Revenue, from $ 90,616 $ 74,338 $ 44,268 $ 9,839 $ — $ 219,061
external customers
============================================================
Gross margin, from $ 37,468 $ 25,231 $ 10,775 $ 9,450 $ — $ 82,924
external customers
============================================================
Business $ 865 $ 102 $ 21 $ — $ — $ 988
reorganization and
integration
expenses
Non-operating 1,337 886 (1,298) 243 (2,980) (1,812)
expense (income),
including
corporate
administration
charges
————————————————————
EBITDA (Loss) (1) $ 314 $ 1,254 $ 2,386 $ 1,524 $ (1,922) $ 3,556
Depreciation and 1,730
amortization
expenses
Interest expense 306
(income), net
Provision for 116
(benefit from)
income taxes
Loss (income) from 213
discontinued
operations, net of
taxes
———-
Net income (loss) $ 1,191
==========

For the Three Hudson Hudson Hudson Hudson Corporate Total
Months Ended June Europe ANZ Americas Asia
30, 2010
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Revenue, from $ 80,717 $ 65,249 $ 40,819 $ 8,184 $ — $ 194,969
external customers
============================================================
Gross margin, from $ 34,559 $ 21,723 $ 10,039 $ 7,916 $ — $ 74,237
external customers
============================================================
Business $ 450 $ — $ 101 $ — $ — $ 551
reorganization and
integration
expenses
Non-operating 1,148 1,015 393 38 (3,440) (846)
expense (income),including
corporate
administration
charges
————————————————————
EBITDA (Loss) (1) $ 2,466 $ 1,369 $ (991) $ 1,311 $ (1,034) $ 3,121
Depreciation and 2,186
amortization
expenses
Interest expense 243
(income), net
Provision for 515
(benefit from)
income taxes
Loss (income) from (52)
discontinued
operations, net of
taxes
———-
Net income (loss) $ 229
==========

(1) Non-GAAP earnings before interest, income taxes, and depreciation and
amortization (–EBITDA–) are presented to provide additional information about
the company–s operations on a basis consistent with the measures which the
company uses to manage its operations and evaluate its performance. Management
also uses these measurements to evaluate capital needs and working capital
requirements. EBITDA should not be considered in isolation or as a substitute
for operating income, cash flows from operating activities, and other income or
cash flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of the company–s profitability or
liquidity. Furthermore, EBITDA as presented above may not be comparable with
similarly titled measures reported by other companies.

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HUDSON HIGHLAND GROUP, INC.
Reconciliation For Constant Currency
(in thousands)
(unaudited)
The Company operates on a global basis, with the majority of our gross margin
generated outside of the United States. Accordingly, fluctuations in foreign
currency exchange rates can affect our results of operations. Constant currency
information compares financial results between periods as if exchange rates had
remained constant period-over-period. The Company currently defines the term
–constant currency– to mean that financial data for a previously reported
period are translated into U.S. dollars using the same foreign currency
exchange rates that were used to translate financial data for the current
period.
Changes in revenue, direct costs, gross margin, and selling, general and
administrative expenses include the effect of changes in foreign currency
exchange rates. Variance analysis usually describes period-to-period variances
that are calculated using constant currency as a percentage. The Company–s
management reviews and analyzes business results in constant currency and
believes these results better represent the Company–s underlying business
trends.
The company believes that these calculations are a useful measure, indicating
the actual change in operations. Earnings from subsidiaries are rarely
repatriated to the United States, and there are no significant gains or losses
on foreign currency transactions between subsidiaries. Therefore, changes in
foreign currency exchange rates generally impact only reported earnings and not
the company–s economic condition.

For The Three Months Ended March 31,
——————————————–
2011 2010
——————————————–
As As Currency Constant
reported reported translati currency
on
——————————————–
Revenue:
Hudson Europe $93,710 $76,654 $1,470 $78,124
Hudson ANZ 70,804 56,822 6,113 62,935
Hudson Americas 45,812 39,507 10 39,517
Hudson Asia 8,213 7,135 389 7,524
——————————————–
Total 218,539 180,118 7,982 188,100
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Direct costs:
Hudson Europe 54,773 44,124 1,034 45,158
Hudson ANZ 46,785 39,046 4,194 43,240
Hudson Americas 35,456 30,228 (14) 30,214
Hudson Asia 327 299 19 318
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Total 137,341 113,697 5,233 118,930
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Gross margin:
Hudson Europe 38,937 32,530 436 32,966
Hudson ANZ 24,019 17,776 1,919 19,695
Hudson Americas 10,356 9,279 24 9,303
Hudson Asia 7,886 6,836 370 7,206
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Total $81,198 $66,421 $2,749 $69,170
============================================

Selling, general and administrative
(a):
Hudson Europe$35,271 $31,453 $353 $31,806
Hudson ANZ 22,582 17,608 1,899 19,507
Hudson Americas 10,472 10,785 17 10,802
Hudson Asia 6,890 6,224 322 6,546
Corporate 5,169 4,550 (2) 4,548
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Total $80,384 $70,620 $2,589 $73,209
============================================

(a) Selling, general and administrative expenses include depreciation and
amortization expenses.

CONTACT: David F. Kirby
Hudson Highland Group
212-351-7216
david.kirby@hudson.com
News Source: NASDAQ OMX

26.04.2011 Dissemination of a Corporate News, transmitted by DGAP –
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Language: English
Company: Hudson Highland Group, Inc.

United States
Phone:
Fax:
E-mail:
Internet:
ISIN: US4437921061
WKN:

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